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Grayscale has published a new report suggesting that the coming Bitcoin halving event may be different from previous ones.
Grayscale Believes, Coming Bitcoin Halving Will Be Different
The world’s largest digital asset manager, Grayscale, has published a report suggesting that the upcoming Bitcoin halving event in April 2024 could be fundamentally different from previous ones due to significant on-chain activity and positive market structure updates.
The release of new Bitcoin will halve around April 2024. Despite potential short-term challenges for miner revenues, key on-chain activity and favorable market structure updates could make this halving completely different, according to analysts. Here’s what to expect in the upcoming halving, unlike previous halvings, according to the report.
Faced with declining block reward revenue and high production costs, miners have prepared by raising funds through equity/debt issuance and reserve sales.
Analysts Explained
According to analysts, significant fundraising efforts such as Core Scientific’s $55 million equity offering, Stronghold’s $15 million equity raise, and Marathon Digital’s ambitious $750 million hybrid equity raise underscore the industry’s proactive stance on shoring up reserves.
Collectively, these measures suggest that Bitcoin miners are well positioned to weather the upcoming challenges, at least in the short term.
According to Grayscale, even if some miners exit the market altogether, the resulting drop in hashrate could lead to an adjustment in mining difficulty, potentially lowering the cost per coin for remaining miners and keeping the network in balance.
According to analysts, the emergence of Inscriptions has revitalized on-chain activity. As of February 2024, more than 59 million Non-Fungible-Token-like (NFT) collectibles have been written, generating more than $200 million in transaction fees for miners. This trend is expected to continue, supported by renewed developer interest and continued innovation in the Bitcoin blockchain.
The success of Inscriptions has had its own effects on the Bitcoin network. As block rewards diminish over time, the question of how to incentivize miners to secure the network becomes more pressing. With transaction fees from transactions in these tokens already accounting for around 20% of total miner revenue, this emerging trend of inscription activity offers a new way to maintain network security through increased transaction fees for now.